Resolve to prep home early for peak vacation season

Barbara O'Hara Hamilton is making her house in the 33000 block of Chula Vista Avenue in Dana Point into a vacation rental after living in it for 21 years. PAUL BERSEBACH, ORANGE COUNTY REGISTER

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View from the foyer at Barbara O'Hara Hamilton's house in the 33000 block of Chula Vista Avenue in Dana Point. Hamilton is making her house a vacation rental after living in it for 21 years. PAUL BERSEBACH, ORANGE COUNTY REGISTER

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The kitchen was recently remodeled at Barbara O'Hara Hamilton's house in the 33000 block of Chula Vista Avenue in Dana Point. Hamilton is making her house a vacation rental after living in it for 21 years. PAUL BERSEBACH, ORANGE COUNTY REGISTER

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View of the living room and dining room at Barbara O'Hara Hamilton's house in the 33000 block of Chula Vista Avenue in Dana Point. Hamilton is making her house a vacation rental after living in it for 21 years. PAUL BERSEBACH, ORANGE COUNTY REGISTER

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The back yard of Barbara O'Hara Hamilton's house in the 33000 block of Chula Vista Avenue in Dana Point features a fireplace and built-in grill. Hamilton is making her house a vacation rental after living in it for 21 years. PAUL BERSEBACH, ORANGE COUNTY REGISTER

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Barbara O'Hara Hamilton is turning her house in the 33000 block of Chula Vista Avenue in Dana Point into a vacation rental after living in it for 21 years. PAUL BERSEBACH, ORANGE COUNTY REGISTER

•Inform neighbors that the property will be rented out for a period of time.

Resolutions aside, in January many folks look to make some extra income and focus on a goal other than losing weight or reducing their carbon footprint.

Right after the turn of the New Year, some homeowners start preparing their homes to rent out as vacation rentals for the spring and summer.

"Nowadays because of the economy, everybody is looking for a way to capture a new revenue stream," said Paul Aubin, president and owner of Newport Beach Vacation Properties. "They already have an asset."

Properties in beach cities are among the most popular for short-term rentals among vacationers who prefer homes to hotel rooms. Homeowners can work with a vacation rental agency or market properties themselves through websites such as vrbo.com or itrip.net.

Researching your city's rules on rentals is the first, most important step in the home preparation process.

Newport Beach is one of the most welcoming cities in the county to vacation rentals, Aubin said. Newport Beach, for instance, requires a short-term launching permit for weekly rentals. A lifelong permit is $146; the business license is $148 a year. Dana Point, Capistrano Beach, Corona del Mar, Newport Coast, San Juan Capistrano and San Clemente are all relatively amenable to the business.

Seal Beach recently adopted one of the county's strictest laws related to rentals under 29 days. After receiving complaints about rowdy visitors, the City Council banned all future short-term rentals in December and now requires owners of current rentals to apply for conditional-use permits.

Huntington Beach and Laguna Beach also have regulations for homeowners who want to rent out their homes to vacationers. In Laguna Beach, for example, the city hasstepped up enforcement of rules governing short-term rentals, said Team Laguna real estate agent Kate Keast.

"They (homeowners) have to have the conditional-use permit and you have to apply with the city for that," Keast said. The homeowner then has to pay a 12 percent bed tax to the city to enable them to market their property as a weekly rental.

"It seems like the market has shifted," Keast said. "Maybe it's the restrictions, but it seems like we're booking more months now as opposed to the weeks since the city has cracked down on that."

Barbara O'Hara Hamilton, a real estate broker, regularly rents out two properties of her own as vacation homes. She said screening prospective renters has left her with no complaints.

"I've never had any problems," Hamilton said. "Nothing broken, nothing stolen. People are usually very respectful."

Hamilton started using her first property – an upper unit in a duplex in Corona del Mar – as a vacation rental after she experienced trouble with a full-time tenant who rented annually, she said. Now she markets the unit as a weekly vacation property. Hamilton said she's making more income, upwards of $6,800 on a fully booked month, much more than the $1,600 per month she netted when the property rented annually to one person. The business has proved so lucrative for Hamilton that she is now renting out a house in Dana Point as a second investment property.

"It has just been a win-win," she said.

About 40 percent of vacationers who rent Hamilton's property are visitors from other countries, and the remaining 60 percent are from Northern California, the Pacific Northwest, Las Vegas and Scottsdale. Since the rental agency handles the property, it is turned over and cleaned in between renters while Hamilton collects her income.

Homeowners can potentially make more extra income in a shorter period of time if they rent their home out during peak seasons.

Aubin said the return is "between 20 percent and 30 percent more annually with a vacation rental than if you were to rent it out to one person the entire year." Homeowners often can net more income from weekly vacation rentals than monthly ones, he said.

"The myths out there are if you go with weekly rentals, your house will be destroyed," he said. "That's not the case."

Aubin's company screens incoming rental inquiries, checking out potential renters to give homeowners peace of mind that their home won't be mishandled.

He said his company typically gets a rush of people looking to rent out their properties in early January. With the spring break market starting in late March and lasting through the end of April, homeowners need to start now to get homes listed and ready to rent to vacation renters.

"If you're a homeowner and you're tying to prepare your home and market it for those time periods, you really need to get it up on the websites in January," Aubin said.

•Establish a possible financial forecast – how many weeks out of the year will it be rented out and at what rate?

•Apply for a business license with the city. The city of Newport Beach, for instance, requires a short term launching permit for weekly rentals. A lifelong permit is $146; the business license is $148 per year.

•De-personalize the home and remove clutter.

•Remove personal items and confidential files and papers.

•Ensure the home has Wi-Fi internet access.

Stock the kitchen with the appropriate tools and cookware; stock bedrooms with an extra set of linens.

"The expectation isn't too different than when people are buying a house," he said.

The minimum a homeowner could rent out a home and still make a large profit is 10 weeks in the summer season, Aubin said. "To really reap the rewards in this business, ideally you would want to buy an investment property and turn it over to a (vacation rental) company," he said. "You just sit back and get your check every month."

Aubin predicts a busy spring and summer vacation rental market, saying his company is busy with travel bookings at a time that is typically the slowest of the year for business. He said his company is also getting calls from homeowners wanting to rent properties.

"The economy has kind of shifted and motivated these people that were wealthy years ago," Aubin said. "They're still doing pretty well, but everyone is looking to capture that money they lost in the market. And they're making some tremendous money doing it."

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